Today, Bloomberg reports that the law for Internet rights passed the lower house of Brazil’s Congress last night, advancing the bill after President Dilma Rousseff ended a six-month standoff by giving up on a measure she said would protect Brazilians from spying.

The removal of a requirement for companies to host data from Brazilian users within the country’s borders was a win for Google Inc. (GOOG) and Facebook Inc., which had lobbied against the provision. Rules preventing Internet service providers from favoring some types of Web traffic over others were left intact, despite resistance from phone carriers such as Oi SA and Telefonica Brasil SA.

The bill makes Brazil the leader among large countries in upholding the principle of net neutrality, in which providers must grant equal access to the entire Internet, without selectively blocking or slowing down services. With Brazil weeks away from hosting an international Internet conference, Rousseff chose to let the law advance, even with weaker provisions for the country’s oversight of its citizens’ data.

“Brazil is a giant country, and passage of this law will provide a model for implementing net neutrality as a policy measure in other major markets,” Katherine Maher, advocacy director for international digital rights organization Access, said by phone from Washington before the vote.